[Federal Register Volume 60, Number 232 (Monday, December 4, 1995)]
[Notices]
[Pages 62119-62120]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-29388]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36515; File No. SR-Phlx-95-58]


Self-Regulatory Organizations; Philadelphia Stock Exchange, Inc.; 
Order Granting Approval to Proposed Rule Change Relating to Trader 
Registration and the Use of the Series 7A Examination

November 27, 1995.
    On September 22, 1995, the Philadelphia Stock Exchange, Inc. 
(``Phlx'' or ``Exchange'') submitted to the Securities and Exchange 
Commission (``Commission''), pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'') and Rule 19b-4 thereunder, a 
proposed rule change to require registration of persons who solicit or 
handle business in securities and are compensated by a member or 
participant organization for which the Phlx is the Designated Examining 
Authority (``DEA''). On October 6, 1995, the Exchange submitted to the 
Commission Amendment No. 1 to the proposed rule change amending 
paragraph (c)(ii) of Rule 604, which names the Series 7A as the 
appropriate examination for Limited Registration/Floor Members,\1\ to 
clarify that this is the appropriate examination for such members only, 
not all members who conduct a public business from the equity trading 
floor.\2\

    \1\ A Limited Registration/Floor Member is a member who conducts 
a public business that is limited to accepting orders from 
professional customers for execution on the trading floor. The 
Series 7A examination is a module of the Series 7 (the General 
Securities Registered Representative Examination) developed to test 
the knowledge of relevant securities laws and Exchange rules 
required of such members. See Securities Exchange Act Release No. 
32698 (July 29, 1993), 58 FR 41539 (August 4, 1993) (File No. SR-
NYSE-93-10).
    \2\ See letter from Gerald O'Connell, First Vice President 
Market Regulation and Trading Operations, Phlx, to Glen Barrentine, 
Senior Counsel, SEC, dated October 3, 1995. In Amendment No. 1 the 
Exchange explained the purpose of its proposed amendment to Rule 
604(c)(ii).
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    The proposed rule change and Amendment No. 1 were published for 
comment in Securities Exchange Act Release No. 36395 (October 20, 
1995), 60 FR 54904 (October 26, 1995). No comments were received on the 
proposal.
    Currently, the Exchange requires Series 7 Registered 
Representatives to register with the Exchange on Form U-4 pursuant to 
Rule 604(a) and Limited Registration/Floor Members to register pursuant 
to Rule 604(c). However, there is no requirement for proprietary 
``upstairs'' traders (i.e., those who trade for the firm's own account) 
to register with the Exchange. This proposal adopts such a requirement 
as Rule 604(d). Similar to Rules 604 (a) and (c), the proposal would 
require registration on Form U-4. This form is currently used in the 
Exchange's membership application process for prospective members or 
participants, as well as the officers, shareholders and directors of 
such organizations. In order to prevent duplicative registration, the 
proposal would not apply to persons who are otherwise registered with 
the Exchange.
    The proposed rule change also seeks to amend paragraph (c)(ii) of 
Rule 604. Although the organization of Rule 604, as well as the intent 
behind its adoption, indicates that paragraph (c) and subparagraph (ii) 
thereunder apply only to Limited Registration/Floor Members,\3\ on its 
face the text of 604(c)(ii) can be construed to apply to all members 
conducting a public business. The amendment adds limiting language to 
Rule 604(c)(ii) to clarify that the Series 7A is the appropriate 
examination for Limited Registration/Floor Members, not all members 
conducting a public business from the equity trading floor.

    \3\ See Securities Exchange Act Release No. 35258 (January 20, 
1995), 60 FR 5449 (January 27, 1995) (File No. SR-Phlx-94-15) (order 
approving the Phlx's adoption of the Limited Registration/Floor 
Member status and its use of the Series 7A for such members).
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    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange, and, in 
particular, with the requirements of Section 6(b).\4\ In particular, 
the Commission believes the proposal is consistent with the Section 
6(b)(5) requirements that the rules of an exchange be designed to 
promote just and equitable principles of trade, to prevent fraudulent 
and manipulative acts, and, in general, to protect investors and the 
public.

    \4\ 15 U.S.C. 78f(b).
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    The Commission believes that requiring a firm's proprietary traders 
to register with the Exchange will aid in the prevention of fraudulent 
and manipulative acts by allowing the Exchange to maintain a complete 
record of those trading for a member or participant organization, not 
just persons handling customer accounts. The Form U-4 will provide 
background information on such traders, as well as a basis for further 
Exchange research if needed, thereby enhancing the Exchange's 
examination program.
    The Commission also believes that the amendment to Rule 604(c)(ii) 
will enhance member compliance with this rule. By specifically naming 
floor members as the parties for whom the 

[[Page 62120]]
Series 7A is the appropriate examination, members will be able to 
readily discern whether the Series 7A requirement is applicable to 
them.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\5\ that the proposed rule change (SR-Phlx-95-58) is approved.

    \5\ 15 U.S.C. 78s(b)(2).
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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\6\

    \6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-29388 Filed 12-1-95; 8:45 am]
BILLING CODE 8010-01-M